Professional Documents
Culture Documents
A Himalaya clause is a contractual provision expressed to be for the benefit of a third party who is not a party to the contract.
Although theoretically applicable to any form of contract, most of the jurisprudence relating to Himalaya clauses relate to
maritime matters, and exclusion clauses in bills of lading for the benefit of employees, crew, and agents, stevedores in particular.
Contents
The Himalaya case
Legal developments since Adler v Dickson
The United States
Sample Himalaya clause
Footnotes
"Passengers and their baggage are carried at the passenger's entire risk", and
"The company will not be responsible for and shall be exempt from all liability respect of any ... damage or injury
whatsoever of or to the person of any passenger..."[2][3]
Being unable to sue the steamship company in contract, Mrs Adler instead sued the master of the ship and the bosun in
negligence. The defendants sought to rely on the protection of the exclusion clauses on the passenger's ticket; but Mrs Adler
argued that under the doctrine of privity of contract, the defendants could not rely on the terms of a contract to which they were
not party.
The Court of Appeal declared that in the carriage of passengers (as well as in the carriage of goods) the law does permit a carrier
to stipulate not only for himself, but also for those whom he engaged to carry out the contract,[4] adding that the stipulation
might be express or implied. On the particular facts, the court held that the defendants could not take advantage of the exception
clause as the passenger ticket passed no benefit to servants or agents, neither expressly nor by implication.[5]
As a consequence of this decision, specially drafted Himalaya clauses benefiting stevedores and others began to be included in
bills of lading.
As the negligent master and bosun were employees acting in the course and scope of their employment, their employer would
have been vicariously liable. Although the case does not specifically discuss vicarious liability, Denning LJ stated,[6] "...the
steamship company say that, as good employers, they will stand behind the master and boatswain and meet any damages and
costs that may be awarded against them".
Although the decision in The Himalaya is clear and unambiguous, the reasoning underpinning the case is still the subject of
some debate. The courts at various times have suggested that the exception to the common law rules of privity of contract may be
founded upon "public policy" reasoning, the law of agency, trust arrangements or (with respect to goods) by the law of bailment
rather than the law of contracts.
The Himalaya decision itself has been partly superseded by legislation in the United Kingdom on two fronts:
Under s.2(1) of the Unfair Contract Terms Act 1977, it is no longer possible to limit liability for personal injury or death caused
by negligence;
Under the Contracts (Rights of Third Parties) Act 1999, section 6, contracts may confer benefits upon third parties, in a wider
form than under the decision in the Himalaya.
Although the Contracts (Rights of Third Parties) Act 1999 does NOT apply to contracts for carriage of goods by sea (in order
to avoid conflict with the Carriage of Goods by Sea Act 1971), the 1999 Act does permit the giving to a third party the benefit
of an exclusion or limitation clause in the contract.
The following cases reveal how English common law has progressed since Adler v Dickson:
Scruttons v Midland Silicones [1962] AC 446: The House of Lords applied the Privity Rule to prevent a negligent stevedore
from relying on a limitation clause in the bill of lading.[7]
N.Z. Shipping v Satterthwaite (The Eurymedon) [1975] AC 154: The Privy Council found that enough had been done to allow
a negligent stevedore to rely on such a limitation clause.[8]
Port Jackson Stevedoring v Salmond, The New York Star [1980] 3 All ER 257 PC developed the law further.[9]
The Mahkutai [1996] AC 650, 664–5, where Lord Goff opined that it was "perhaps inevitable" that there should develop "a
fully-fledged exception to the doctrine of privity of contract".
Houtimport v Agrosin, The Starsin [2003] 1 Lloyd's Rep 571 also developed the law further.[10][11]
Footnotes
1. Adler v Dickson [1954] 2 LLR 267, [1955] 1 QB 158 [1] (http://www.bailii.org/ew/cases/EWCA/Civ/1954/3.html)
2. Adler v Dickson [1954] 2 LLR at page 269
3. Note: The Unfair Contract Terms Act 1977 s 2 makes void any contractual term seeking to limit or exempt liability for death or
personal injury caused by one's negligence.
4. Adler v Dickson [1954] 2 LLR ; Denning LJ at page 270
5. Adler v Dickson [1954] 2 LLR ; Denning LJ at page 272
6. at page 270
7. http://www.nadr.co.uk/articles/published/CommercialLawReports/Scruttons%20v%20Midland%20Silicones%201961.pdf
8. http://www.nadr.co.uk/articles/published/CommercialLawReports/Eurymedon%201974.pdf
9. http://netk.net.au/Contract/Port.asp
10. http://www.nadr.co.uk/articles/published/ArbLR/Starsin%202001.pdf
11. http://www.simsl.com/Publications/Articles/Articles/01_BoL_OwnChart_4.asp
12. Eisen und Metall AG v Ceres Stevedoring Co Ltd and Canadian Overseas Shipping Ltd (The Cleveland) [1977] 1 Lloyd's Rep
665
Text is available under the Creative Commons Attribution-ShareAlike License; additional terms may apply. By using this site, you agree to the Terms of
Use and Privacy Policy. Wikipedia® is a registered trademark of the Wikimedia Foundation, Inc., a non-profit organization.